Crude prices plunged more than 3% on Monday to multi-month lows as investors are anticipating signs of imminent oil oversupply following OPEC’s latest complex output decision.
Global benchmark Brent crude was down 3.5% on Monday, at $78.29 a barrel as of 19:33 GMT. It marks the first time that Brent has been trading below $80 since February.
The USA crude benchmark, West Texas Intermediate (WTI), was also down over 3.7% at $74.14 per barrel.
Most of the decline is due to the OPEC meeting and concerns about more oil coming to the market in general, Direxion’s Ed Egilinsky told Barron’s, several countries are going to phase out and that will get more oil into markets after October.
On Sunday, OPEC+ agreed to extend both voluntary and group-wide production cuts until 2025, but left room for additional voluntary reductions of 2.2 million barrels per day (bpd) by eight core members, including leading exporters Saudi Arabia and Russia.
The group also agreed to a new output target for the United Arab Emirates, which has been pushing for a higher quota. Some analysts called the group’s decision bearish for oil prices in light of high interest rates and rising output from non-OPEC producers like the USA.
Ultimately, a combination of factors has come into play, independent oil analyst Gaurav Sharma told Reuters, highlighting disappointing economic indicators in the USA and China.
Investors reportedly have been concerned that the latest OPEC+ decisions could be reversed, depending on market conditions.
Only an all-out war between Israel and Iran could drive oil prices up by $30-$40 per barrel, Bank of America experts have told clients in a research note seen by CNBC.
Tehran and West Jerusalem have traded threats since Iran conducted its first direct military attack on the Jewish state, in retaliation for a suspected Israeli airstrike on the Iranian diplomatic mission in Syria earlier in April, 2024.
If a war is limited to the two nations, Bank of America sees little impact on US economic growth and the Federal Reserve’s monetary policy. A general regional war, however, could have a substantial impact on the USA, according to the institution.
RT. com / ABC Flash Point News 2024.
The USA is loosing grip on reality?
Lost this a long time ago, when they invaded and confiscated Indian lands, killing the inhabitants to get opposition out of the way. The same deadly fascist mentality is now presented through the rest of the world. Veni, vidi, vici.